We are shifting our overweight allocation to equities as we anticipate more upside potential despite expected interest rate cuts by the Banko Sentral ng Pilipinas (BSP) and the US Federal Reserve. With yields projected to trend lower, investors can lock in gains from investments in fixed income and reallocate to equities, which we expect will offer higher returns as a result of improving market sentiment and stronger earnings growth. This strategy aims to capture the momentum in the equity market while maintaining a balanced exposure to fixed income.
2024 Metrobank Forecast | 2025 Metrobank Forecast | 2026 Metrobank Forecast | |
---|---|---|---|
Real GDP (2018=100) | 5.7% | 6.2% | 6.2% |
Inflation (2018=100) | 3.2% | 2.9% | 3.0% |
USDPHP | 55.3 | 54.5 | 53.7 |
BSP RRP Rate | 5.75% | 4.75% | 4.25% |
Fed Funds Rate | 4.50% | 3.50% | 3.00% |
The Philippine total gross borrowings surged in September to PHP 367.18 billion from PHP 103.25 billion in the same period last year, increasing by 255.64%, amid the budget deficit widening to PHP 273.3 billion. External debt makes up 60% of September’s gross borrowings, which soared to PHP 221.98 billion from PHP 11.18 billion last year, while domestic borrowings climbed to PHP 145.2 billion from PHP 92.07 billion in September 2023. The increase in borrowing can also be attributed to favorable borrowing costs as the monetary easing of the US Fed and the Bangko Sentral ng Pilipinas (BSP) has started. Sources: Bloomberg, Businessworld
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